Insurance

An insured has a major medical policy with a $500 deductible and a coinsurance clause of 80/20. If he incurs medical expenses of $4,000, the insurer would pay

$2,800

When the insurer stipulate the time period for payment of claims, how soon must the insurer pay a death benefit claim after receiving the proof of death?

2 months

When the insurer stipulates the time period for payment of claims, how soon must the insurer pay a death benefit claim after receiving the proof of death?

2 months

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would the insured be receiving benefits under an "own occupation" disability plan?

2 years

An employee group with which of the following number of employees would qualify for a medical savings account?

23 employees

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

25% tax on the amount not distributed as required

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

How long must an insurer retain an advertisement for its long-term care policies?

3 years

A producer licensed in Alabama must notify the Insurance Department of any change of address in his or her residence or business address within how many days?

30

How long is the required free-look period in long-term care policies issued in Alabama?

30 days

If a new individual long-term care policyholder is not satisfied with a new policy, within how many days can the insured return the policy for a full premium refund?

30 days

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?

45 days

If an application for an annuity is gathered any way other than face-to-face, within how many days after the insurer receives the completed application must the applicant be given a Buyer's Guide?

5 business days

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?

65

If an employer provides long-term group disability insurance for its employees, what percentage of monthly wages are lower-paid employees eligible to collect?

66 and 2/3%

How many eligible employees must be included in a contributory plan?

75%

A hospital indemnity policy will pay

A benefit for each day the insured is in a hospital.

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?

A debtor has an insurable interest in the life of a lender.

Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis?

Adult day care

Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account?

Amanda is 67 and is covered by a basic medical expense policy

All of the following applicants for an insurance producer license are exempt from prelicensing education requirements EXCEPT

An applicant for a dealer's license.

In insurance, an offer is usually made when

An applicant submits an application to the insurer

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income

Which of the following is NOT true of Section 1035 Policy Exchanges?

Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?

As long as the policy is in force

What document describes an insured's medical history, including diagnoses and treatments?

Attending Physician's Statement

After a person's employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true?

By law, the new, individual policy must provide the same benefits as the group insurance policy.

After a person's employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true?

By law, the new, individual policy must provide the same benefits as the group insurance policy.

HMOs that compensate their health care providers based upon a predetermined payment amount per enrollee for a specified period of time, in exchange for providing a defined set of covered health care services, regardless of the amount of services actually provided, are said to be operating on which method?

Capitation

What type of annuity promises to pay to a beneficiary, in a lump sum, the difference between the amount paid into the contract and the benefits received prior to the annuitant's death?

Cash refund annuity

What size companies are eligible for health reimbursement accounts (HRAs)?

Companies of all sizes

All of the following are lines of insurance that may be transacted under a life and accident/health producer license EXCEPT

Consequential loss insurance

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Contracts of Adhesion

What is another name for interest-sensitive whole life insurance?

Current assumption life

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

The law that protects consumers against the circulation of inaccurate or obsolete information is known as

Fair Credit Reporting Act

What insurance concept is associated with the names Weiss and Fitch?

Guides describing company financial integrity

What type of insurance would be used for a Return of Premium rider?

Increasing Term

Which of the following is NOT true regarding a flexible spending account?

It does not have limits on contributions

Which of the following statements is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount

All of the following would be qualified as a dependent under a Dependent Care Flexible Spending Account, EXCEPT

Jeremy had to have both legs amputated, but has learned how to take care of himself and to get around in a wheelchair

Every insurer marketing Long-Term Care insurance must establish marketing procedures to ensure all of the following EXCEPT

LTC policies are marketed effectively to prospective insureds.

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

Level term

Which of the following settlement options in life insurance is known as straight life?

Life Income

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

All of the following are true regarding the Medical Information Bureau (MIB) EXCEPT

MIB reports are based upon information supplied by doctors and hospitals

Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?

Medical information

In a long-term care policy, pre-existing condition limitations

Must appear as a separate paragraph and be clearly labeled.

An insured purchased an insurance policy 5 years ago. Last year, the insured received a dividend check from the insurance company that was not taxable. This year, the insurer did not send a check. From what type of insurer did the insured purchase the policy?

Mutual

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?

Need is predicted using the number of years until the insured's retirement.

Which renewal provision(s) must be included in a long-term care policy issued to an individual?

Noncancellable and guaranteed renewable

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice Regarding Replacement

A producer has become disabled. In order to keep his business going, what may his designee do?

Obtain a temporary license

In long-term care insurance, what type of care is provided with intermediate care?

Occasional nursing or rehabilitative care

Under which of the following organizations are the practicing providers compensated on a fee-for-service basis?

PPO

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

Which of the following stipulates that life insurance premiums can be paid in advance of policy issuance?

Payment of Premium Clause

Which of the following is the most common time for errors and omissions to occur on the part of an insurer?

Policy delivery

Who might receive dividends from a mutual insurer?

Policyholders

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death.

When health care insurers negotiate contracts with health care providers or physicians to provide health care services for subscribers are

Preferred Provider Organization (PPO)

All of the following are examples of risk retention EXCEPT

Premiums

Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT

Premiums always stay the same

All of the following are considered to be supplemental benefits under an HMO plan EXCEPT

Preventive services

What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid?

Prospective review

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization?

Provide medical services only from physicians in the network

Which of the following insurance options would be considered a risk-sharing arrangement?

Reciprocal

Which nonforfeiture option provides coverage for the longest period of time?

Reduced Paid-Up

Which of the following is NOT specifically prohibited by state law as an unfair trade practice?

Reducing the premiums paid by employers for group insurance based on loss experience

Which of the following components of dental insurance does NOT require the payment of a deductible?

Routine and preventive maintenance

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

Settlement option

When an employee covered under a health reimbursement account changes employers, the HRA

Stays with the employer

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

Taxation on accumulation

Which of the following statements about HRAs is TRUE?

The account allows roll-over of unused balances at the end of the year at the employer's discretion

Which of the following does NOT have to be disclosed in a long-term care (LTC) policy?

The aggregate amount of premiums due

Which of the following characteristics applies to defined benefit plans but not defined contribution plans?

The amount of contributions made by the employer is determined by an actuarial formula

Which of the following is TRUE regarding variable annuities?

The annuitant assumes the risks on investment

All of the following are ways in which a Major Medical policy premium is determined EXCEPT

The average age of the group

Which of the following is NOT a characteristic of a group long-term disability plan?

The benefit can be up to 50% of one's yearly income

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to

The insured

Which of the following is correct regarding selecting a primary care physician in a PPO plan?

The insured may choose medical providers not found on the preferred list.

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured's age at death

Illustrations used in the sale of life insurance policies must contain all of the following EXCEPT

The insured's financial classification

Which of the following is NOT a feature of a guaranteed renewable provision?

The insurer can increase the policy premium on an individual basis

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The insurer will pay the full death benefit from the group policy to the beneficiary.

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

The policy is owned by the company

What must happen when an individual policy or annuity has been personally delivered to the policyowner?

The policyowner must sign a delivery receipt

All of the following are true about variable products EXCEPT

The premiums are invested in the insurer's general account.

Which of the following is true of the Fair Credit Reporting Act?

The purpose of the act is to protect the consumer's right to privacy by making certain that underwriting data is confidential, accurate, relevant, and properly used.

The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over which years? Which years of income may be deleted from calculation?

Their highest 35; lowest 5

Which of the following is NOT true regarding Blue Cross and Blue Shield organizations?

They are insurance companies

Which of the following is the best reason to purchase life insurance rather than an annuity?

To create an estate

The Waiver of Cost of Insurance rider is found in what type of insurance?

Universal Life

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of Premium

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Which of the following determines whether disability insurance benefits are taxed?

Whether the premiums were tax deductible

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than

With the policy

How long after receiving notice of a claim does an insurer have to furnish proof of loss forms?

Within 15 days

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company?

Within 90 days or as soon as reasonably possible, but not to exceed 1 year

Which of the following is NOT covered under a long-term care policy?

acute care hospital

Which of the following is the most precise synonym for an "authorized" insurer?

admitted

In a replacement situation, all of the following must be considered EXCEPT

assets

The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case?

beneficiary

All of the following statements are true regarding tax-qualified annuities EXCEPT

employer contributions are not tax deductible

The authority granted to an agent through the agent's contract is referred to as

express authority

Mortality - Interest + Expense =

gross premium

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

one-year term option

Which renewability provision are you most likely to see on a travel accident policy?

period of time

Blue Cross and Blue Shield organizations are

service organizations

All of the following long-term care coverages would allow an insured to receive care at home EXCEPT

skilled care

An applicant is considered to be high-risk, but not so much that the insurer wants to deny coverage. Which of the following is NOT true?

the insurer will issue a conditional coverage

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

twisting